Revisiting Regent Park

At what point do you simply throw up your hands and “Alright, I’m in,” when it comes to buying into the incredible value in Regent Park?

Every day, I scroll through new listings on MLS and I scoff at the low prices of condos on Cole and Sackville Streets, and I wonder when buyers will start flocking there in droves.

I don’t know how long it will take for the area to outgrow the sting of the two words “Regent” and “Park,” but I do know that my beloved St. Lawrence Market neighhourhood was full of boarded-up buildings twenty years ago.

Has Regent Park become a “buy low” proposition?

1Cole

On Monday night, I had a young man meet me at the office so he could pick my brain about the Toronto condo market.

Admittedly, this young man wasn’t planning on buying for upwards of a year, but he still wanted to get his feet wet, put a face to a name, and ask a few questions about condos in the downtown core.

One of the questions he asked me was, “What are the up-and-coming neighbourhoods as you see them?”

I basically answered back, “What makes you think there are any?”

Up-and-coming?  We’re in Toronto here, folks.  There aren’t any secrets left in this city.

Neighhourhoods, plural, as though there are a bevy to choose from.

But he put me to the test, and said, “If you had to pick one, what would it be?”

So I thought about it, and I said, “I guess it would be Regent Park.”

Wow, did I ever think the day would come?

The young man and I chatted for close to an hour, and I regaled him with stories from my formative years, like everybody’s favourite grandfather.  I swear, I’m a 90-year-old man in a 34-year-old’s body…

We talked a little bit about investment horizon, risk versus reward, and expected or “accepted” return in the market, and by that I mean basically what we would “settle for” as a return.

I told him how I’d lost all my money in the stock market when I was 19-years-old, and how it’s changed my investment outlook and made me more conservative.

He told me he would settle for a steady 1.5% increase in the value of his real estate purchase, every year, for the next ten years (relative to inflation, but that’s a bit too in depth).

So when we began talking about Regent Park, I basically told him it’s a classic risk-reward scenario.

When I mustered up the guts to call my Dad’s stock broker in 1999 to tell him I wanted to invest, I remember the first thing he said was, “I can make you about 10-15% on Imperial Oil.”

I replied, “Per month?”

I wanted to be a shooter, and the thought of only making 10-15% per year on my money was laughable.

So instead, I lost it all…

If I had it to do over, I’d have taken that 10% in a heartbeat.  I would have left the technology, biotech, and gold stocks to the insiders and institutions, and settled for a conservative return.

So in my Monday evening discussion with this young man, I told him these stories…..and more.

I likened the potential for investment in a Regent Park condo to the more volatile and risky stocks that can make people a lot of money, or fail to return anything close to the market average.

Right now, in Regent Park, properties are selling for about a 30% discount from the market average in the downtown core.

It’s tough to find a “deal” in Toronto, but if the market for properties in Regent Park catches up to the overall market average over the next few years, then a condo-buyer today could significantly outperform the market.

It’s a risk, given that a more “safe” or conservative investment might be the St. Lawrence Market, or King West, but it could be a reward for those willing to take on said risk.

I’ll give you an example.

Right now at 25 Cole Street, there is a 710 square foot, 1-bed-plus-den, with parking and locker, listed for $329,900.

Now perhaps you’re not all A+ real estate students here, and you don’t immediately know what those numbers mean.

But to put it in perspective, if somebody asked me randomly, “What’s the going rate today for a 710 square foot, 1-bed-plus-den, with parking and locker, in the downtown core,” I’d probably tell them it’s around $399,900.

That’s based on a “gut feeling,” but if you want to put a number to it, consider that the average price per square foot downtown is around $600, so a 710 square foot condo might average $426,000.

Maybe more, maybe less.

In some buildings in King West, you might pay $499,900 for that same unit.

But given that this unit in Regent Park has been on the market for two weeks, and the listing agent has done a terrible job with the listing (no photos, for starters…), maybe this thing could be had for $315,000.

Really?

Three-hundred-fifteen-thousand?

For 710 square feet with parking?

Yes, it’s in Regent Park.  I think we’ve covered that.

But people look at the location as a drawback, given the neighbourhood, and the name “Regent Park,” but consider how close it is to the centre of the city, and suddenly location could be a pro, not a con.

Let’s just talk about proximity to Yonge Street.  Here’s a map that shows Yonge-to-Parliament (where the Cole Street condominiums are, just north of Dundas), and the same distance going west:

RegentMap

Walking west from Yonge Street, you wouldn’t even hit Spadina before you’ve gone the same distance as Yonge Street to Regent Park.

Some of the most sought after condos in the downtown core are in King West at Bathurst, and that would take this map a lot further west.

We hear “location, location, location” so often that it almost becomes redundant, but at some point we have to consider Regent Park’s location an asset.

If somebody was looking at a map of Toronto from afar, and they saw a 2-bed, 2-bath condo priced at $399,900 in Regent Park, and a similar-sized unit priced at $699,900 in King West, they’d undoubtedly wonder what they’re missing.

I’m not going to pretend that every major metropolitan area doesn’t have its hot spots, and its rough patches.  But the West Village in Manhattan is priced essentially the same as the East Village on the other side of 4th Avenue, as both are equidistant to the financial district, so is it completely unreasonable to assume that a price gap in two geographically similar neighbourhoods in Toronto could shrink over the coming years?

Believe me, I’m not suggesting that Regent Park is going to overtake King West, nor am I even suggesting that these two areas will EVER draw even in price.

But I am suggesting that there’s a chance that price gap could shrink as prices in the downtown core continue to rise, and more and more buyers see Regent Park as too good a deal to turn down.

It’s a classic risk-reward proposition.

A buyer in 2015 could be significantly rewarded if the market catches up in Regent Park.

Or, that buyer could look back in 2020, and ask, “What the hell was I thinking?”

I was very skeptical when the idea of “revitalizing” Regent Park first came about a decade ago.  When the first batch of condos were built, I mocked them.  I said, “Yes, but you’re still in Regent Park.”

Today, if that square block between Parliament, Dundas, River, and Gerrard was known as “Dudley Square” or “Roxbury,” through some magical transformation where people suddenly have the words “Regent” and “Park” wiped from their memories, I’m convinced that attitudes would be different.

My attitude has changed, that’s for sure.

Regent Park is far from number-one on my list, but in the past year, I’ve started sending clients listings in the neighbourhood.

Sure, these are clients on a serious budget, or those looking for value, or both.  And to be fair, I’m not a fan of CityPlace, but I might send a client a property or two in that neighbourhood as well, except that the prices are significantly higher than Regent Park, and some of the buildings (I’m sure Google will tell you…) have serious structural problems, lawsuits, and red flags that would prohibit me from selling there.

I guess the point I’m trying to make in today’s blog is this: every buyer reaches a crossroads where they have to compare incredible value to a more sought-after neighbourhood and all the advantages that come with it, and as the “deal” becomes more and more attractive, every buyer has a jumping off point.

What’s your jumping off point?

At what price do you decide to revisit Regent Park?

26 Comments

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  1. opticien skikda says:

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  2. Georgie says:

    The 1 and 25 Cole buildings just had a rather steep fee increase, 12+%, which might spook some potential buyers. Any perceived value quickly gets eroded.

  3. Willson says:

    I recently just bought a unit at 55 Regent Park Blvd, South tower and one of the reasons why I decided to call Regent Park my new home was that the location is at a prime area (Easy access to DVP/Gardiner, walkable to Eaton Centre, Distillery District, St Lawrence Market) and also the fact that MLSE is revitalizing the area with a new outdoor basketball court, hockey rink and a soccer/cricket field. I thought it was a great value for the price you pay.

  4. b says:

    would be very much interested in a video of you going through condo listings within Regent Park, and comparing them to others ones in Toronto East

  5. Turnbull A says:

    RP..Not a chance. Many of the condos in the area build quality is crap. Just take a look at the cheap pieces they used for the HVAC. Already rusting and not even three years old. And the neighbourhood. So if I say there are a lot of Kanye people there, I get labeled as a racist? You want to know why the other side (ie Kensington) is so much better? Because you have major commercial areas all around (ie College/Spadina) and a university. RP…sure, good luck scoring milk butter and eggs from Sobeys..along with a couple hits of coke.

    1. Clifford says:

      Heard the same thing about many other areas in the past that are now highly sought after.

      Daniels is one of the better builders in the city. What makes their build quality any worse than the newer buildings we see around the city. Falling glass? Nope. Notice of assessments? Nope. Frankly, Daniels has done a pretty good job with RP.

      I don’t even know what “Kanye people” means but I’m sure it’s not complimentary.

      1. AndrewB says:

        My guess is “Kanye people” are black people.

        @Turnbull A
        Anyways, RP is already incredibly close to major commercial areas. You can pretty much walk to Yonge street. You’re a hop and a skip over the DVP to Riverdale, Leslieville, etc. As RP evolves, so too will the retail and commercial landscape. Like Clifford and many others have mentioned, some of the most highly sought after areas in the city were once desirable. Change is inevitable.

  6. BillyO says:

    Interesting timing of this post as we approach the next phase of Regent launching this Sat. While I know you are no fan of pre con, at $540 PSF, do you see a little bit of value here?

    Also, somewhat related? Have you payed around with the charts on condos.ca? Basically search any condo and you can see historical resale figures. The results are pretty interesting, lots of material for a future blog post (unsurprisingly King West resale is strong, as is the Bay St corridor and it looks like the Ritz has rebounded after trading just below $700 PSF – take a look). Not sure how accurate it is, but current values seem about right

  7. Sherry says:

    I’m quite sure there’s a race aspect to Regent’s park signifying “danger”. My kids to go school just north of College on Spadina. Their school backs off onto the Scott Mission, the largest shelter I believe in the city if not the country. Their school fronts onto Robert Street, on which sit semis which are well over $1 M. Across spadina, just steps away is the CAMH hospital with its emerg. Two blocks in the other direction is Kensington with all of its sketch (and, let’s not romanticize KM, it’s dirty, dingy, and there are a lot of mentally ill/homeless there if that’s what you’re afraid of). So, yeah, none of these areas are predominantly black, so people overlook the shelters, clinics etc referred to in other comments. I do think prices will go up when people (white people) get desperate enough to move in.

    1. AndrewB says:

      The largest shelter actually is Season House on George Street and it’s the largest men’s shelter in Canada. Yes obviously who people who are bothered by this, there is a large Somalian, Ethiopian and persons with mental illness population in RP. However, areas like Roncy LV, KW are all close to the same types of populations and maintain high prices by being in proximity to Parkdale. I do think that RP will diversify ethnically and it’s already starting.

      1. Chroscklh says:

        AndrewB – you comment today add very much value to discussion. Chroscklh think you know city well. Back home, u would be jail for know too much but here we celebrate. St. Lawr is great example of mixed-income neighborhood; Will RP get there? Sherry make point – people too racist? My experience – i live before in nice place, sketch neighborhood. You learn quick people mental ill most harmless (unless is current dictator or general of army) -even drug addict no want interact. But Chroscklh concede my experience as 6’5″ many-tatooed man may differ from other. I also ugly, for what worth.

    2. Clifford says:

      Good point. I think a lot of people struggle with Regent Park and even St Jamestown because there is a large cross section of blacks and other poor, visible minorities. Why do you think Scarborough gets such a bad wrap…along with Brampton?

      All it takes is for middle class and upper class whites to move into an area to gentrify. This is what’s happening with Regent Park. Precisely why I wanted to move there. We were ready to buy a 2+1 unit in one of the newer condos there. But all it took was a few friends/family members to scare my girlfriend out of living there. It’s shaping up to be a really nice area. Once they add more retailers it will be a destination rather than a place to avoid. There are a lot of good things happening there. So, we didn’t buy there and ended up paying much more to live in an area that wasn’t as sketchy. I still keep telling her we missed the boat there. The property is already undervalued by 30%+. As homes get more unaffordable and Regent Park builds up, that percentage will decrease. I agree with David here. Great investment. There is still some sketch, but that will improve.

      If only people knew what some of these sought after areas used to be like 10-20 years ago. King West was a dump.

      1. Clifford says:

        Just to add to my post. There are some sought after areas with buildings that have not appreciated much. I had a loft on King St right in corktown. The value had not gone up in the last 2 years or so. So, something to consider. Not every condo in a nice area is going to go up in value. RP has gone up.

      2. AndrewB says:

        Well I mean it’s easy for a condo value to go up when it’s so much lower than the average.

        See my post below about Brampton. Replied to the wrong person lol. The blog isn’t super mobile friendly.

    3. joel says:

      I don’t think this has as much to do with race, as until I read these posts I had no idea that RP was racially different. (And I take the streetcar through it everyday) What I have noticed is that there is a very large homeless/addict crowd there that sits in the park and hangs out on Queen. I think once a Starbucks moves in where the dive bars are, and police spend more time in the area we will see prices rise. I don’t think that this is too far off.

      1. AndrewB says:

        This usually only happens in concentration around Queen and Sherbourne, which technically isn’t the heart of RP and not where the development is focused. That crowd isn’t going anywhere (men’s shelter at that street corner).

        As for Brampton, it does get a bad wrap at times but not necessarily for the items you mention. I grew up there and it’s a pretty nondescript suburb. North West Brampton where all the new development happened is known for Jane and Finch transplants. The main wrap Brampton gets is its “too Indian”. It’s boring suburb town up in there.

        1. Jon says:

          Queen and aherbourne is Moss Park. RP borders parliament/shutter/river/Gerrard.

  8. Brent says:

    Interesting blog post and something I’ve thought of a lot. What about Upper Jarvis, and just west of St James Town? Some nice Tridel buildings in that area. James Cooper Mansion seems very reasonable and a lot closer to the subway than Regents Park. Also, properties at the Verve are a lot cheaper than similar properties just 2 blocks west. I personally would be willing to save 50K to add 3 minutes extra to my walk toward Yonge street. It surprises me that a block or 2 can make such a difference price wise in this city.

    1. wendy says:

      I think the reason why James Cooper Mansion is relatively lower is because of the high maintenance fee that includes nothing…..despite of the cool looking mansion, and party room facilities, the building don’t even have a pool in it.

  9. Libertarian says:

    David wrote…….Or, that buyer could look back in 2020, and ask, “What the hell was I thinking?”

    That’s the exact thought that I had when I sold my place around Harbourfront. Oh well, you live and you learn.

  10. Marina says:

    It’s a question of time, but how much time? It could be another 10 years, or another 25.
    Are young buyers going to go to Regent Park, or to the new PanAm games condos? I don;t now the answer, but I do know the clinics and shelters around Regent Park are not going anywhere soon.
    Most big cities have sketchy areas – cant eliminate them all.

    1. AndrewB says:

      Corktown is largely similar to RP. That being said, about the shelters and sketchiness, I think that’s up for debate. Sure everyone knows Season House and Maxwell. Do you know where all the other nondescript shelters are? There are many you wouldn’t even know are shelters. David has 2 shelters within streets of his condo but that doesn’t affect his condo value all that much. Yes it will take time for perceptions to change, but the reality is the neighbourhood WILL change. Roncy never used to be what it is now. Parkdale has changed and is actually quite beautiful. As time passes neighbourhoods will become more mixed income like St. Lawrence. Gentrification will happen as people get priced out of areas and the affordable areas redevelop. Areas like RP only look bad because they lack business and consist of all projects, TCHC and inner city older homes. As development happens, New buildings give a fresh look to the area, the evolve will evolve. My office is moving to Dundas and Sackville and I was astonished at how great things look in the area now. It’ll only continue to improve.

      1. Kyle says:

        I agree, it takes a long time for perception (mostly uninformed) to catch up to reality. Those that live in reality have an opportunity to do well, those that dwell on the stigma and perception will miss an opportunity.

        Lots of Toronto’s most sought after neighbourhoods were once really rough. Yorkville used to actually be a scary ass place. Likewise for Cabbagetown, Junction, Roncy and Trinity Bellwoods. Even now you still hear people (again mostly uninformed) refer to Dufferin Grove, Leslieville, and Little Portugal as rough areas, but those that actually frequent these neighbourhoods, know this to be entirely wrong. It is only a matter of time before Parkdale, Corktown and Regent Park also become highly sought after places to live.

        1. Joe Q. says:

          Things can work in reverse as well.

          I grew up in a nice family-oriented part of Scarborough, all 1970s-era detached homes. One day, some time after moving back to the Toronto area (after many many years away) I was channel-hopping in front of the TV and came across a news report about residents who were furious that four grow-houses had been operating on their street. The street looked familiar to me from the news footage — it was the one I grew up on.

          In this case it took about 10-15 years to go from a nice family-centered place (block parties, families all know each other, etc.) to one in which about one in 10 homes housed a marijuana grow operation.

          As prices in the GTA go stratospheric, this is less likely to happen, but the risks are there — neighbourhood “improvement” is not always monotonic.

          1. Kyle says:

            I agree it can work in reverse as well. Parkdale is a perfect example. It went from being a homogenous elite neighbourhood to a homogenous slum to the mixed income neighbourhood it is today. But whether gentrifying or de-gentrifying, there are always real factors or catalysts that triggers it.

            Which is what i was referring to about value associated with reality vs perception. I consider crime and grow ops to be “reality” i.e.tangible things whose presence affect property value. Once those things have been eliminated though it still takes a while for the value associated with perceptions and stigma to recover. In the case of RP, most of the tangible problems of its past are gone or quickly fading. The reality has changed drastically but the value won’t be fully realized until the perceptions change too.

            http://www.theglobeandmail.com/globe-debate/columnists/reconsidering-torontos-regent-park-look-again-its-where-canada-works/article17496247/

  11. AndrewB says:

    Working as a nurse in community mental health, I frequent Regent Park almost all day. The reality? It’s not that bad a neighbourhood. Sure there are some really ugly projects buildings. Those will undoubtedly be torn down at some point. Look at for example St. Lawrence. The Esplanade is over 50% TCHC buildings. Yet it’s become an amazing mixed income neighbourhood. So many neighbourhoods at one point were not considered desirable. King West wasn’t always what it is now. Development and time will change perspectives. As the young buyers flock to Regent Park to get some great deals (and effectively priced out of areas like King West, LV, etc) the retail and business will follow and flourish. I have no doubt that prices will increase there.

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